Tuesday, May 19, 2009

Italy’s solar energy rush risks overheating

From the Financial Times:

Italy, a growing market for renewable energy, is on the road to becoming the first country to achieve “grid parity” – the Holy Grail of solar power, where costs of producing photovoltaic energy fall below retail electricity prices.At the same time, however, the photovoltaic industry is warning of the dangers of a speculative bubble unleashed by the attraction of the highest incentives in Europe but with no long-term clarity over the level of tariffs to be set after 2010.

Analysts say the collapse of the Spanish market, a victim of the credit crunch and property slump, is also driving investors towards Italy in spite of its difficult reputation for business.

“Grid parity is certainly going to be seen next year,” says Anton Milner, chief executive of Germany’s Q-Cells, the world’s largest solar cell producer, referring to Italy’s residential sector....

...Already producers of solar power in Italy are running up against a saturation of power lines that is causing delays of sometimes over a year in connection to the grid.

Puglia, in the heel of Italy with a communist as regional governor, is seen as the most attractive market at present. However, Paolo Rocco Viscontini, head of Enerpoint, warned that prices of agricultural land suitable for solar development had risen as much as six-fold in the past two years.

Cheap food produced by farmers in North Africa is driving Italian farmers off the land, forcing them to look for other sources of income. Local governments are also attracted by the property tax they impose on solar farms.

“Solar is the new real estate in Italy,” complained one project developer, saying that all sorts of property companies were piling into the sector.

Gerardo Montanino, head of GSE, the state-run power management agency, said incentives were too high in Italy at 68-75 cents a kilowatt hour, about double the level in Germany. Tariffs are expected to decrease in 2010 by 2 per cent...MORE